‘America’s Greece,’ California

dreams of raising taxes

Posted: May 21, 2012 2:16 PM ET

Last Updated: May 21, 2012 2:15 PM ET

Watching the twist and turns of the financial/political crisis gripping Greece can make you wonder whether there’s such a thing as too much democracy.

In the case of Greece, there is a common view that the stakes for the global economy are simply too high to let the Greeks decide for themselves how to run their country. Not that there’s any alternative handy.

On the opposite side are people who believe there can never be such a thing as “too much democracy.”

To them I would say, come to California.

Asking whether California is America’s Greece seems like a fair question to more and more people. It’s in financial crisis and, like Greece, has teetered on the brink of bankruptcy.

(With a GDP of about $1.9 trillion it also has an economy that is nearly six times that of Greece, so California’s too-big-to-fail impact on the global economy is not inconsiderable either.)

And once again this election year California voters are poised to make an even bigger mess of things through their devotion to direct democracy: the ballot initiative, which has made a mess of their tax system.

The most recent example of how the democratic impulses of Californians can morph into a tyranny of the majority was the 2008 ballot initiative (Proposition 8) that extinguished the court-ordered right of gay people to marry.

A court of appeal recently overturned that initiative and the U.S. Supreme Court will probably have to sort it all out.

But prior to Prop 8, California’s most famous ballot initiative was Prop 13 which, in 1978, handcuffed the legislature’s taxing ability.

The governor at the time, Jerry Brown (who is back in office now), opposed Prop 13, but the people overruled him.

Vote to raise taxes

Prop 13 put a cap on property taxes and today it is the untouchable third rail of California politics.

Too much democracy? Gov. Jerry Brown is asking Californians to agree to a sales tax increase in a referendum so he doesn’t have to cut any more services.(David McNew/Reuters)

Because property taxes made up a large part of education funding, Prop 13 not only dramatically affected revenues, it also restructured the way in which public schools are funded.

Today homeowners pay a one per cent tax on their property and their property assessments never exceed a two per cent increase a year unless there is a change in ownership.

Meanwhile, California’s schools, which were once among the best in the country, now rank about 48th in surveys.

Brown is once again governor of California and this time it is he who is using a ballot initiative to try to restore some fiscal responsibility to the state budget, which is currently $16 billion in deficit.

He wants to raise taxes.

Actually, he’s promising to cut spending but if he can get his tax hike approved, he’ll forego about $6 billion in spending and job cuts.

So that’s the trade-off; more taxes, fewer cuts.

The tax hike he’s proposing is an addition of one-quarter of one per cent to the state’s sales tax and a higher income tax rate for high-income earners.

It would be a clear choice for voters, except that Brown’s tax increase isn’t the only one likely to be on the ballot in November. There are several, including Molly Munger’s.

The Munger plan

Munger is a Pasadena lawyer with a very large bank account. Her father, Charles Munger, is the billionaire vice-chairman of Berkshire Hathaway, which means Molly has one degree of separation from Warren Buffet, the Oracle of Omaha, who started all the hubbub about making rich people pay more taxes.

Munger’s ballot initiative would make most Californians pay higher taxes and it would stipulate that most of the revenue go to public schools and early childhood development programs.

She expects her campaign to cost more than $10 million, which means it will be a serious threat to the governor’s initiative.

And that’s the problem.

Generally speaking, support for raising taxes is going to come from the same Democrats who elected Brown, a group that probably includes Munger herself, so there might be just enough of their votes to carry the day.

Unless they split their vote between the governor’s tax plan and Munger’s, which they likely will.

In that case the same Democrats who elected Brown could end up blocking him from doing what they elected him to do, and forcing him to do exactly what they don’t want, which is cut even more spending.

If that’s how it turns out it in November, it will boggle the minds of many clever people, but in California, perhaps not unlike Greece, this is what democracy looks like.

About The Author

In the fall of 2009, after years of reporting on national politics from Ottawa, Keith Boag headed West to open up the CBC’s new Los Angeles Bureau and become the West Coast correspondent, reporting from the U.S. and Mexico.

It is difficult to convey the enormous impact fracking is going to have on America.

Now, if you only listened to radical environmentalists you would think fracking – a process that allows companies to extract natural gas from deep rock – is going to make large parts of America an environmental wasteland.

But my investigations have found that the truth about fracking is often obscured by campaigners’ scare stories and exaggerations.

Instead as I have investigated the process, I have discovered it is bringing a financial and energy revolution to some of the poorest parts of America. Quite simply, in America where there is fracking there is no recession or downturn. It is a stimulus package that came with no help from the government, is going to last for decades after the current politicians have left the scene, and will be producing so much natural gas that it may mean America finally becomes energy self-sufficient.

Although fracking arrived in these states without government assistance – government interference now threatens to stop the process in its tracks.

Thanks to the Oscar-nominated documentary Gasland, many people and many government officials believe fracking pollutes water and creates wastelands wherever it is used. The government is investigating and fracking is being banned in a number of states and regions across the country.

However, like so many documentaries nowadays Gasland is high on anecdote and emotion, but low on science and fact.

One of the most dramatic images in Gasland is footage of a resident lighting his tap water with flames shooting out of the faucet.

As a journalist I wanted to learn more, so I went to a Q&amp;A with Gasland director Josh Fox. As I questioned him, Fox eventually admitted that he knew people could light their tap water in these areas decades before fracking came on the scene. However Fox said that he did not include this fact in his documentary because “it was not relevant.” That was quite an admission so I quickly threw a recording of the Q&amp;A up on YouTube and to my shock Josh Fox’s lawyers wrote to YouTube threatening them unless the video was removed immediately.

Quicker than I could say “fair use,” Fox and his lawyers pursued my little clip across the internet and using threats shutting it down wherever it appeared.

I don’t respond very well to censorship so rather than shutting me up, Fox’s high-handed lawyering got me very interested in what he was trying to cover up. I decided to make my own documentary called FrackNation dedicated to telling the type of stories Josh Fox seems to want to suppress. But unlike Josh Fox and Gasland I could not rely on corporate financing from HBO – or wealthy Hollywood actors.

So along with my wife Ann McElhinney and co-director Magdalena Segieda we decided to use Kickstarter, a crowdfunding website. Kickstarter normally hosts proposals showcasing Occupy Wall Street or radical environmental style documentaries but we put our FrackNation pitch up and in just under eight weeks we have raised over $190,000 in small donations from 2800 members of the public.

For us it was proof that there was a truth out there that was being ignored by the establishment media.

Our backers know the truth about fracking and they are angry that their stories and experiences are not being properly represented in the media. They have seen environmental activists and journalists such as Josh Fox run with big headlines when the EPA launched investigations into water pollution “incidents” in Wyoming, Pennsylvania and Texas. But when it was later announced that there was no contamination – there was no retraction from the campaigners. According to the locals the media simply ignored the findings and moved on to report the next scare story.

We’ve interviewed farmers who are angry. One elderly farmer cried as he told me how it upset him that urban elites, such as Josh Fox and the actors Marc Ruffallo and Robert Redford said he doesn’t care about his own land.

One lady said Hollywood millionaires need to know that the farmers in these areas are not their slaves to be told what to do and how they should work their land.

Another farmer pointed out that without the money from the shale gas boom they will have to sell their farms – for housing. Do environmentalists want the green fields covered in houses?

We want to tell the truth about fracking but we need help from the public. Josh Fox is bringing out a sequel to Gasland. The Hollywood/Environmental establishment only wants to tell one (untrue) side of the story.

If you want to help tell the truth about fracking and restore some balance to the documentary world go to FrackNation.com. There is less than a day left to donate. We, and the millions of people across America who are looking to fracking for a better future, really need your help.

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